SETTING UP BUSINESS AUSTRIA 2024

General Aspects

Austria is a country in south central Europe with borders to eight other countries. It covers a surface of 83,871 km² of which two thirds are alpine terrain.

Legal Forms of Business Entities

Legal form Feature

Branch Office

The total population is around 8.3 million people. The official language is German. As Austria is part of euro-zone its monetary unit is the Euro.

Remarks

Uncommon form of business in Austria, because there are many founding

but is part of the legal entity of the foreign company. All responsibilities and operating restrictions to be considered.

An extension of a non-Austrian parent company. Has no legal personality, for any liabilities in Austria lies with the foreign company.

The branch office has to be entered into the commercial register. Depending on the characteristics of the branch the consent of the Federal Ministery of Economic Affairs may be required.

Sole Proprietorship Set up by a single natural person, who is fully and personally liable for the debts of the company. Suitable for small businesses and start-ups. No special formalities required.

Partnerships Partnerships require at least two partners with a personal commitment. Their liability for the partnership’s debts and liabilities is generally unlimited and personal.

There are the following partnerships in Austrian law:

Civil Law Partnership (Gesellschaft bürgerlichen Rechts – GesbR)

General Commercial Partnership (offene Gesellschaft–OG)

No minimum share capital is required and the accounting and publication obligations are less extensive than those for corporations.

An association of individuals or enterprises united in the achievement of a joint contractual purpose. Suitable for small or new companies. A written agreement is not necessary but recommended.

Since 01.01.2015 there are some provisions of law which are applicable to this form of partnership. Nevertheless agreements made by the partners go first.

An association of at least 2 individuals both of them fully liable for debts with their private assets. The company must be entered in the commercial register (Firmenbuch).

The classic company form for small and medium-sized business.

Limited Partnership (Kommanditgesellschaft – KG)

Corporations (Kapitalgesellschaften)

A legal form related to the OG, but with the option of limiting the liability of some of the partners.

The general partner is personally liable without limitation, as well as with his private assets. The liability of the limited partners is limited to their respective share of the partnership capital.

Independent legal entity, meaning that the holder of rights and obligations is not the individual shareholder, but the company itself.

Shareholders are liable for company’s debts to the amount of their capital share, only.

There are the following corporations in Austrian law:

Private Limited Company (Gesellschaft mit beschraenkter Haftung – GmbH)

Flexible Company (Flexible Kapitalgesellschaft –FlexCo)

Public Limited Company (Aktiengesellschaft – AG)

Private limited Company and Partnership (GmbH & Co KG)

Austrian Private Foundation

In order to obtain legal personality the GmbH must be entered into the commercial register. It has to be formed by one or more persons, who may be individuals or legal entities, resident or non-resident, with a minimum share capital of EUR 10.000 since 01.01.2024

Suitable for medium-sized companies seeking additional startup capital from persons who prefer a limitation of liability.

Starting with 01.01.2024 this new company can be formed by means of notarial deed and entry into the company register. The minimum share capital is EUR 10.000 and the capital contribution of a shareholder must be at least 1 EUR.

The AG comes into existence upon registration in the commercial register. The minimum share capital of an AG is EUR 70,000.

At least one partner, the general partner, has to be liable for debts and liabilities of the company without limitation. But this fully liable partner may also be a corporation with limited liability. The GmbH & Co KG may have an unlimited number of capital investors (limited shareholders), whose liability is limited on the capital contribution they subscribed.

The Austrian Private Foundation is created trough the contribution of assets and has to be registered in the commercial register.

The most popular legal form of business in Austria, with high flexibility and relatively few obligations.

Half of the minimum share capital has to be paid on a bank account of the GmbH before it can in be entered in the commercial register.

This form of company is intended to offer innovative start-ups in the early stages an internationally competitive option, as this legal form creates the possibility of allowing employees to participate in the company’s success in an uncomplicated manner via shareholdings.

The organizational and accounting obligations and the publication requirements are very extensive.

The GmbH & Co KG combines structures of a Public Limited Company and a limited partnership (KG). It has the same accounting obligations as the private limited company.

Principally the contribution of asstets cause tax of 2,5 % based on the value of the assets. The foundation is subject to a favourable tax regime, but in the last few years peculiar favours have been reduced.

Organizational Questions

Topic Feature

Commercial Register (Firmenbuch)

Trade business licence (Gewerbeschein)

Remarks

Companies of all legal forms must be entered in the commercial register. A company may not enter into any transactions until it has legal identity.

Some activities that are conducted on a regular basis, and with the intent of achieving profits requires a trade/business licence. The trade/ business licence is issued to the company itself. Depending on the kind of business the company will only receive it if a trade manager is appointed.

There are certain trades where no proof of specific qualification is required (Freie Gewerbe).

Bank Account

Transfer of Goods and Machinery

To open a bank account individuals need a valid passport and a confirmation from the local Public Office that Austria is the current place of residence. Companies need an excerpt from the commercial register and a taxpayer ID number.

During tax audits all your bank accounts may be checked. In particular situations the accounts of relatives may be checked, too.

Within the EU goods and machinery can circulate freely. Imports from non-EU states to Austria cause customs duties. Substantial shareholdings, businesses and business assets are covered by exit tax which is not assessed if it is an exit to an EU or EEA-Member State and exchange of information with that State is ensured.

Transfer of Capital Capital can be moved in and out of Austria without any restrictions. Every transaction of money more than € 50.000,- has to be reported to the tax authority by the Austrian banking institution.

Visa and Residence permit

Registration law of beneficial owners

For non-EEA nationals who want to stay in Austria for more than 6 months a residence certificate (Aufenthaltstitel), i.e. a residence permit of unlimited duration, entitles the holder to work in Austria without a work permit.

Since 15.01.2018 the registration law is set into force. This law shell prevent money laundry and financing of terrorism.

In the time of setting up business a Schengen Travel Visa may be sufficient, which enables its holder to stay in Austria for up to 3 months per half year. For a longer stay a residence permit is needed.

Any legal body that is registered in the commercial register is obliged to report on a yearly basis its economic owners which may differ from the legal owners. If the legal entity does wilfully not report its economic owners penalties of EUR 200.000,- will be imposed.

Employment

Topic Feature Remarks

Work permit

Non-EEA nationals, planning to work in Austria for less than 6 months need a Visa and a work permit before entry into Austria.

The “Rot-Weiß-Rot-Card” enables to work in Austria for 24 months for a specific employer. “Rot-Weiß-Rot-plus-Card” enables to work for any employer for one year, up to three years if you meet certain requirements.

Labour law

Non-EEA nationals, planning to work in Austria for longer than 6 months, are required to obtain a residence and a work permit prior to the start of employment. There are different possibilities of permits for which varying requirements have to be met. There are for example job-seeker-visa, RotWeiß- Rot-Card, Rot-Weiß-Rot-plus-Card¸Blue card EU and so on.

Since October 2022, there are faster and simpler procedures and relaxations in the language requirements have been introduced. The authority must decide within 8 weeks if a card is granted or not.

Social system

A certificate of exemption can be issued to employees who have spent at least five years of the last eight years of employment in Austria or to employees who have been married to an Austrian citizen for the last five years and have their residence in Austria.

Minimum wages are not provided for by law, but by collective bargaining agreements (Kollektivverträge - KV). All employees are entitled to paid holiday of at least five weeks a year.

Regular working time is 40 hours a week. Since 1.9.2018 it may not exceed 12 hours a day or 60 hours a week. Nevertheless additional working hours may be allowed by a company agreement. Overtime has to be paid at the normal rate plus at least 50%.

Employees receive full sick pay for six to eight weeks and additional half sick payment for another four weeks. Thereafter social insurance benefits are received.

Austria operates a compulsory social security scheme for all employees, which covers mainly: health, accident, pension and unemployment insurance. Basically the contribution amounts to 17,82 % for the employee and 20,48 % for the employer of the gross salary. So the total social contribution amount is 38,8 % of the gross salary.

Austria has concluded social security treaties with many countries which allows expatriates to remain under their native country´s scheme for a limited period.

Taxation

Topic Feature

Corporate Income Tax (Körperschaftsteuer)

Since 2023 the standard corporate income tax rate is 24% on all taxable earnings.

The corporation is obliged to pay annual minimum income tax (AG: EUR 3,500, GmbH: EUR 500) even if making losses.

Group taxation Group taxation ensures that profits and losses of parent companies and subsidiaries are offset against each other. The group leader combines the results of the group members. This combined result is going to be taxed. For losses, the group relief operates across borders and is also applicable to non-resident first tier subsidiaries. Companies based in EU or countries which provide full administrative assistance may be group members only.

Personal Income Tax (Einkommensteuer)

Value Added Tax (VAT) (Umsatzsteuer)

The tax rate in Austria rises progressively and contains 6 levels. The first rate starts at 20 % for income exceeding the tax-free allowance of € 12.816. For income exceeding € 99.266 the tax rate of 50 % is applicable. Income exceeding € 1.000.000 is taxed by 55 %.

The normal VAT rate is 20 %. There are two lower rates of 10 % and 13 %. 13 % is for example for artist activities, operation of swimming pools, theatres, music and singing performances, museums, films and circuses; 10% for hotel accomodation, camping, rental for residential purposes, books etc.

Remarks

Because of the reduced minimum share capital (see legal forms – private limited company) the minimum corporate income tax for GmbH and FlexCo is 500 € per year beginning with 2024.

The minimum tax is taken into account when profits are taxed in the future and deduced from the calculated tax.

The conditions to form a group are a direct or indirect majority investment in a corporation and the group must exist for at least three years.

Formation of a group does neither require economical or organizational integration nor a domination contract.

There is no joint taxation of married couples or households.

The tax brackets are adjusted to inflation every year (adjustments as high as 2/3 of inflation rate July – June prevoius year).

There is a lower tax for the sale of enterprise value shares of a FlexCO for employees (75% of the base is taxed by a special tax rate of 27,5 %)

Non-residents that make taxable supplies of goods or services in Austria are required to register for VAT.

Since 2022 mail order sales can be declared via EU OSS in only one member state.

Generally there is no input tax deduction for passenger cars and estate cars. Since 2016 input tax deduction for entrepreneurs is possible for cars which are entirely electrically or electrohydraulically driven.

Since 01.01.2020 online-platforms and other electronic interfaces are liable for VAT on deliveries and services which are supported by them.

Taxation in case of partnerships Partnerships are no separate legal entities but associations of partners. Thus, for the income tax the partners themselves are subject to personal income tax, with the individual tax rate applicable to each shareholder.

Compensation Tax (Abgeltungssteuer)

Capital interests and dividends are subject to compensation tax with a flat tax rate of 27,5%.

Capital income

Real Property Tax (Grundsteuer)

Withholding tax (Abzugssteuer)

Non-resident Taxation

The regulation for capital income distinguishes 3 types of capital income: income out of allocation of capital, increase in value and derivatives. Generally a flat tax rate of 27,5 % for all capital income is applicable, except for interest received for loans/deposits at banking institutes the rate of 25 % is applicable.

Non-securitised derivatives are taxed by the general progressive tax rate for personal income.

Since 2022 cryptocurrencies are taxed as capital income generally at 27,5%. The deception between cryptocurrencies is tax free. Disposal against Fiat money are subject to the special tax rate of 27,5 % too.

Inheritance and gift tax

When domestic real estate changes owner, a one-time real estate transfer tax of 3,5 % has to be paid of the purchase price. The tax rate for gratuitously transferred real estate is for the first € 250.000,- 0,5 %, for the next € 150.000,- 2 % and after that 3,5 %. For determining the applicable tax rate all purchases within 5 years between the same persons have to be added up. If there is no economic consideration tax is calculated by a special procedure.

Municipalties levy annual real estate taxes of up to 1% of the assessed property value which usually is much lower than the real value of the real estate.

For several kind of income there is the obligation to withhold 20% of foreign sourced fee as a withholding tax . This withholding tax can be avoided by certificates of residence and taxation in the foreign country submitted in advance. If these certificates are not submitted in advance and taxation is avoided by a double tax treaty this withholding tax can be applied for reimbursement at the Austrian tax authority.

Non-resident individuals and companies receiving Austrian-sourced income are subject to Austrian limited taxation. Dou ble taxation of this income is avoided through double taxation agreements between Austria and the related countries.

In general, the agreements limit the taxation of industrial and commercial activities to the profits attributable to a permanent establishment in Austria. For expatriates there is a simplified consideration of certain expenses. 20 % of the taxable income but a maximum of EUR 10.000,- per year may be deducted as a lump sum. If expenses exceed these figures, an income tax declaration should be filed to the tax authorities.

Non-residents have to file a tax-declaration if income exceeds 2.000,- €, or if they have 2 employments or if a non-resident has one employment and other income exceeding 730,- €.

There is no inheritance or gift tax. For gifts exceeding EUR 50.000,- p.a. between family members and EUR 15.000,- within 5 years between third parties a declaration has to be filed. By not filing the declaration high penalties are imposed.

Limited tax liability

individuals: neither residence (any place of disposal) nor habitual place of abode in Austria (exceptions for EU or EEA-nationals) corporations: neither seat nor place of management in Austria partnerships: status of foreign partnerships (transparent or opaque) is determined based on the main features of Austrian entities, no “checkthe-box”-regime.

Non-resident employers without permanent establishment but employees in Austria have to withhold wage tax and therefor register at the Austrian tax authority. The most common application are employed sales representatives and employees working at home offices.

As mentioned before transfer of real estate within the family and without money transfer is going to be taxed by 0,5 – 3,5 %. The value of the real estate is calculated by a special regime.

Tax on online advertising From 2020, online advertising services that are provided against payment in Austria will be subject to 5 % tax – called digital tax.

An advertising service is deemed to be provided in Austria if it is received on the device of a user with a domestic IP address and is aimed at domestic users based on content and design. The assessment basis of the new digital tax is the fee that the online advertising specialist receives from a client. Expenditures for preliminary work by other online advertising masters may be deducted from this. The digital tax is a self-calculation tax. It is payable monthly, at the latest by the 15th of the second month after the tax claim arises. An electronic annual declaration must be submitted by March 31 of the following year.

Immigration benefit

Scientists, researchers, artists and sportsmen who move to Austria can - if all requirements are met - apply for immigration benefits in the form of the elimination of additional tax burdens. Furthermore, there is also the possibility of granting an immigration allowance, which is, however, reserved for scientists and researchers.

The relocation allowance amounts to 30 percent of the income from domestic and foreign scientific activities, insofar as these are taxed according to the tariff. The tax allowance is granted for five years.

The additional tax burden is eliminated by applying a flat average tax rate to foreign income. Domestic income is not eligible for that tax relief. The flat tax rate results from the ratio between the foreign tax of the last three calendar years and the income earned abroad in the same period. After the tenth calendar year, the tax is gradually brought into line with the Austrian taxation level.

General tax information

Different tools to promote investments are implemented:

- Premium for research and development

- special regime for enterprise value shares

- allowance for investments into tangible assets

…

CO2 emissions cost 45 Euro per metric ton 2024 and will then rise fairly rapidly year by year.

This guide has been prepared by HUBNER & ALLITSCH, an independent member of Antea

Hubner & Allitsch

Leonhardstraße 104

A - 8010 Graz, Austria

Tel.: + 43 316 338 338

steuerberatung@hubner-allitsch.at

www.hubner-allitsch.at

SETTING UP BUSINESS IN AUSTRIA

Antea members in Austria:

GRAZ

Contact partner: Daniel Hubner

Tel.: + 43 316 338 338

Mail: daniel.hubner@hubner-allitsch.at

Web: www.hubner-allitsch.at

VIENNA

Contact partner: Daniel Hubner

Tel.: + 43 316 338 338

Mail: daniel.hubner@hubner-allitsch.at

Web: www.hubner-allitsch.at

Mallorca, 260 àtic 08008 – Barcelona

Tel.: + 34 93 215 59 89

Fax: + 34 93 487 28 76

Email: info@antea-int.com

www.antea-int.com